Larry Ellison has had a hard time persuading investors like Catherine Jackson he’s worth his $103 million paycheck.

The billionaire’s compensation is creating a culture at Oracle Corp. that’s “bad verging on toxic,” Jackson, a senior adviser at pension manager PGGM, which owns 5.7 million shares of the company, said by phone. The company’s board “looks like they’re in Larry’s back pocket,” she said.

Oracle’s total return has trailed the Standard & Poor’s 500 Index over the last five fiscal years ending in May, a performance that prompted the software maker’s shareholders to majority-vote against its pay plan three years in a row, even though about 25 percent of the votes are Ellison’s. With a fortune approaching $45 billion, the 70-year-old has received 7 million options every year from 2007 to 2013.

It turns out Ellison may be a pretty good deal. While Oracle’s stock lagged, a different measure of performance -- economic profit, which is defined as after-tax operating profit minus the cost of capital -- shows the company has on average outpaced 98 percent of companies in the S&P 500 over the past three years.

“I think economic profit is just about the best single measure of company performance,” David Harper, a financial analyst and former compensation consultant, said in an e-mail. “The striking advantage of economic profit is that you get to pay executives for the results under their scope.”

Pay for Performance

Investors grapple with how to measure pay for performance because executive compensation is sometimes a factor in deciding to buy or sell shares. Economic profit better pinpoints whether management’s decisions are producing positive returns after subtracting the costs of debt and equity. A metric such as total stock return can be affected by factors outside an executive’s control.

Ellison’s $103 million pay for fiscal 2014 equates to 2.1 percent of Oracle’s three-year average economic profit, which is better than 52 of the CEOs at companies in the S&P 100 index, according to data compiled by Bloomberg.

Deborah Hellinger, a spokeswoman for Oracle, declined to comment on Ellison’s pay.

“The federal funds rate, whether or not Russia is invading Crimea, the price of oil -- it makes it very difficult for management to determine total shareholder return,” said Jon Lukomnik, executive director of the Investor Responsibility Research Center Institute in New York.

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